Oil futures fell on June 22, with trader concern over bearish impact from interest rate hikes countered by potentially bullish U.S. oil inventory data after preliminary figures showed a fall in stocks.
Brent futures dropped by $1.69, or 2.2%, to $75.43 a barrel by 1109 GMT and U.S. West Texas Intermediate (WTI) crude futures were down $1.63, or 2.3%, at $70.90.
The benchmarks erased gains from the previous session, during which U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls could lower biofuels blending and increase oil demand.
On June 22 the market was cautious after Fed Chair Jerome Powell said two more interest rate hikes of 25 basis points each by the end of the year was "a pretty good guess".
Equities, which often move in tandem with oil, were also down.
The Bank of England on June 22 raised interest rates by a bigger than expected half a percentage point to fight stubbornly high inflation. The increase was the central bank's 13th straight hike.
Higher interest rates could slow economic growth and reduce oil demand.
Further price drivers include official U.S. oil inventory data due at 1430 GMT and Chinese factory activity data due next week.
In a preliminary indicator, industry data showed U.S. crude oil inventories fell by about 1.2 million barrels last week, defying forecasts for a build of 300,000 barrels.
Meanwhile, an executive at U.S. shale producer EOG Resources said oil prices could rise as muted increases in U.S. oil production and cuts by OPEC+ producers will limit supply in the months ahead.
"With demand seasonally rising over the coming months, we expect larger oil inventory declines to become visible and support oil prices," said UBS strategist Giovanni Staunovo.
Recommended Reading
The EPC Market Keeps Its Head Above Water
2024-08-06 - While offshore investments are rising, particularly in deepwater fields, challenges persist due to project delays and inflation, according to Westwood analysis.
How Chevron’s Anchor Took on the ‘Elephant’ in the GoM’s Deepwater
2024-08-22 - First oil at Chevron's deepwater Anchor project is a major technological milestone in a wider industry effort to tap giant, ultra-high-pressure, high-temperature reservoirs in the Gulf of Mexico.
Chevron’s Gulf of Mexico Anchor Project Begins Production
2024-08-12 - Chevron and TotalEnergies’ $5.7 billion floating production unit has a gross capacity of 75,000 bbl/d and 28 MMcf/d.
Wood Mackenzie: OFS Costs Expected to Decline 10% in 2024
2024-07-30 - As service companies anticipate a slowdown in Lower 48 activity, analysts at Wood Mackenzie say efficiency gains, not price reductions, will drive down well costs and equipment demand.
E&P Highlights: Sept. 16, 2024
2024-09-16 - Here’s a roundup of the latest E&P headlines, with an update on Hurricane Francine and a major contract between Saipem and QatarEnergy.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.